As a follow-up to the L2 Federal Resources webinar on “Attributes of an Adequate Accounting System,” Aronson LLC government contracting specialists Nicole Mitchell and Brian Bender have prepared answers to several attendee questions:
Is my contract covered by the Cost Accounting Standards (CAS), and how do I determine the level of CAS coverage (e.g., Full, Modified, Not CAS Covered)?
Click here to download a flowchart that illustrates the method for determining CAS coverage and whether or not your company should be submitting a Disclosure Statement.
Does my company have a robust set of policies and procedures?
At a minimum, your business should have the following written policies and procedures (P&P) in place prior to DCAA review/audit:
- · Policies:
- Code of Conduct and Business Ethics
- Segregation of Unallowable Costs
- Direct Vs. Indirect Costs
- Allocation of Indirect Expenses
- Labor, Timekeeping and Expense Reporting
- Compensation and Bonuses
- Contract Billing
- Invoicing of Subcontractor and Vendor Costs
- Budget and Planning
- Estimating and Budgeting
- Travel Expenses & Per Diems
- · Procedures
- Billing Cost-Type and T&M Projects
- Billing Fixed Price Projects
- Customer and Project Setup
- Set Up of New Customers
- Set Up of New Projects
- Contract Modifications
- Timekeeping and Expense Processing
- Timesheet and Labor Processing
- Expense Processing
- Payroll Processing
- Accounts Payable
- Vendor Maintenance
- Non-Purchase Order AP Vouchers
- Accounts Payable Disbursements
- Voiding Accounts Payable Checks
- Cash Receipts
We also suggest having the following forms/processes in place:
- Contract Briefs
- Value and Funding Tracking Worksheets
- Billing Setup and Invoice Processing Checklists
- At-Risk Approval Checklists
- Monthly, Quarterly, and Annual Accounting Checklists
- Travel Request Forms
Please contact us to discuss options for customizing a P&P manual to match your business needs. An engagement setup where we can understand your business, contract mix, accounting system, and future endeavors would allow for adequate P&P customization.
Can my business delay payment to our subcontractors until after we are paid?
No. According to Federal Acquisition Regulation (FAR) 52.216-7(b)(ii), subcontractor costs which are submitted to the Government must be paid “[i]n accordance with the terms and conditions of a subcontract or invoice” and “[o]rdinarily within 30 days of the submission of the Contractor’s payment request to the Government.”
Can our prime contractor delay payment to us until after they are paid?
No. For the same reasons noted above, FAR 52.216-7(b)(ii) states that subcontractors must be paid within 30 days of when their cost is invoiced to the Government. This does not mean 30 days from when you submit your invoice to your Prime, or 30 days from when your Prime receives your invoice, rather your company must be paid 30 days from when your Prime includes your cost on their invoice to the Government.
What should my policy and procedure manual state in relation to payment of subcontractors?
Your written policy for subcontractor payments CANNOT include language such as: “Subcontractors will be paid under the terms and conditions of the applicable subcontract after COMPANY is paid.” Rather, appropriate language should be: “COMPANY will request the reimbursement of subcontractor costs only to the extent those costs have been paid or will be paid in accordance with the payment terms of the subcontract and ordinarily with thirty (30) days of the date the prime contract invoice was submitted to the Government.”
Where can I download the DCAA workprograms noted in your presentation?
The DCAA workprograms noted in the presentation, and others utilized by the DCAA, can be found at www.dcaa.mil under the Standard Audit Programs link (menu on the left). As a reminder, the workprograms noted were:
- Non-major contractors
- Standard Form (SF) 1408 Preaward Survey of Prospective Contractor Accounting System (DCAA workprogram 17740)
- Post Contract Award Accounting System Audit at Nonmajor Contractors (DCAA workprogram 17741)
- Major contractors
Visit and bookmark these valuable Aronson links for continuing information and resources for government contractors:
- Aronson’s Fed Point blog provides topical information, original articles, online resources, reading and research recommendations, statistics, trends and more. Industry experts from various practice areas within our Government Contract Services Group update the blog throughout the week, so be sure to add the RSS feed to your news reader or social media hub!
- Aronson’s Events Calendar gives you information on upcoming webinars and events that may be of interest to you. Our consulting team hosts many events and webinars and is often asked to speak at Chamber events throughout the DC region, as well as the Maryland Congressional Procurement Conference, Deltek Insight, and industry associations such as the Professional Services Council, the Greater Washington Board of Trade, AFCEA and all the DC region CPA societies.
- Previously recorded webinars can be accessed through Aronson’s Resources Page. This section has been designed to offer access to important information about archived newsletters, trends, recent legislation/rulings, and general news that directly impacts industry groups we serve.
Please contact us with any project questions or if you want additional information about any government contracting topics.
Nicole Mitchell, CPA, is a Partner in Aronson LLC’s Government Contract Services Group, where she provides consulting and accounting services to government contractors, including financial regulatory compliance, contract pricing, and complex cost accounting structures.
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